Loson v Stack & Anor

When deciding whether a money judgment should be payable by instalments, the court must balance the debtor’s request for time against the judgment creditor’s right to enforce the judgment. The debtor must provide evidence supporting a realistic schedule under which the principal and interest can be paid within a reasonable period.

The jurisdiction is not confined to exceptional cases or solvent debtors. However, where the proposed instalments will not discharge even the accruing interest and there is no realistic prospect of substantial repayment, the court should ordinarily preserve the creditor’s choice of enforcement measures.

The appellant owed the respondents £8,000 under two County Court costs orders. She applied under rule 40.9A of the Civil Procedure Rules to pay £50 per month. The District Judge accepted that this was the most she could afford and granted the application, believing that the order would not obstruct a pending bankruptcy petition.

HH Judge Luba QC allowed the respondents’ appeal. He held that the District Judge had applied the wrong test and had failed to consider that the proposed payments would not cover statutory interest. The debtor appealed. The central issue was the proper approach to varying a money judgment by imposing an instalment regime under rule 40.9A.

1. Appeal dismissed. The District Judge had exercised the rule 40.9A jurisdiction on the wrong basis. An instalment order meant that the judgment debts were no longer immediately due and payable. The District Judge should therefore have proceeded on the assumption that the order was likely to govern recovery unless later varied. It could materially affect the pending bankruptcy proceedings.

2. The court had to balance the debtor’s wish for time and protection from enforcement against the creditors’ interests under judgments already made in their favour. The proposed £50 monthly payment did not cover all accruing interest and offered no prospect of repaying the principal.

3. High Court decisions concerning rule 40.11 of the Civil Procedure Rules were not directly applicable to an application to vary a County Court judgment under rule 40.9A, but their treatment of postponed payment was relevant. The rule 40.9A power was not confined to cases involving a material change of circumstances.

4. The court declined to describe successful applications as exceptional or to restrict the jurisdiction to solvent debtors. A debtor seeking an instalment order must nevertheless produce evidence supporting a realistic repayment schedule. The creditor must be expected to receive the principal and interest within a reasonable period. To that extent, the creditor’s interests are paramount. What constitutes a reasonable period depends on the circumstances, including the commercial context, the duration of the postponement, the prejudice to the creditor and the payment of interest.

5. Where a debtor cannot make any meaningful payment, the court should ordinarily leave the creditor free to select an available enforcement method. Although the appellant’s circumstances attracted considerable sympathy, there was no evidence of a realistic prospect that she could discharge a significant part of the liability in the reasonably near future or at all. HH Judge Luba QC was therefore right to set aside the instalment order and dismiss the application.

1. Court of Appeal (Civil Division): The debtor’s appeal was dismissed by [2018] EWCA Civ 803. The order setting aside the instalment arrangement and dismissing her application was upheld.
2. County Court at Central London, HH Judge Luba QC: The judgment creditors’ appeal was allowed. The District Judge’s instalment order was set aside and the debtor’s application was dismissed.
3. County Court at Central London, District Judge Wright: The two costs orders were varied under rule 40.9A of the Civil Procedure Rules to permit payment at £50 per month.